Labor Productivity and Costs

For release 10:00 a.m. (EDT) Thursday, May 26, 2011 USDL-11-0762
Technical Information: (202) 691-5618 • dipsweb@bls.gov • www.bls.gov/lpc
Media Contact: (202) 691-5902 • PressOffice@bls.gov
PRODUCTIVITY AND COSTS BY INDUSTRY:
SELECTED SERVICE-PROVIDING AND MINING INDUSTRIES, 2009
Labor productivity -- defined as output per hour -- rose in 44 percent of the 52 detailed service-
providing and mining industries studied in 2009, the U.S. Bureau of Labor Statistics reported today.
This was down from 56 percent in 2008 and from 65 percent in 2007. Unit labor costs, which reflect the
total labor costs required to produce a unit of output, declined in 33 percent of the industries in 2009,
compared to 31 percent in 2008.
Output and hours also rose in fewer industries in 2009 than in the previous two years.
Output rose in only 6 of the 52 service-providing and mining industries in 2009, while hours increased in
7. (See table 1.) In over one quarter of the industries studied, output and hours both declined at double-
digit rates.
Industry labor productivity measures are updated as data become available. Productivity measures for
industries in other sectors can be accessed on the BLS Labor Productivity and Costs web site at
www.bls.gov/lpc.
In 2009, output per hour increased in 21 of the 47 detailed service-providing industries and in two of the
five detailed mining industries studied. (See table 1.) Although productivity changes varied widely
among the service-providing and mining industries, almost all of the increases in productivity involved
declines in hours. Of the 52 detailed industries studied, only medical laboratories produced productivity
gains accompanied by an increase in hours.
Declining hours resulted in productivity increases in some industries where output was falling, as well as
in industries where output was expanding. Productivity increased the most in photofinishing and in
wireless telecommunications carriers. Output of wireless telecommunications carriers increased while
output in photofinishing fell; however both industries posted double-digit declines in hours. Productivity
declined the most in the truck, trailer and RV rental and leasing industry, where hours fell but output fell
much more.
Productivity rose in the overall mining sector and in the oil and gas extraction and metal ore mining
industries in 2009, but declined in coal mining, in nonmetallic mineral mining and quarrying, and in
support activities for mining. Hours fell in all of the mining industries.
Among the 20 largest (by employment) service-providing and mining industries, drinking places
(alcoholic beverages) recorded the largest productivity increase, as hours fell more than twice as fast as
output. Support activities for mining, where both output and hours fell by double digits, recorded the
largest productivity decline.
Unit labor costs rose in 31 of 47 service-providing industries and in 3 of 5 mining industries in 2009.
Unit labor costs declined the most in photofinishing and in oil and gas extraction.
The industry productivity performance in 2009 contrasts with the more positive industry productivity
performance over the longer term. Between 1987 and 2009, labor productivity increased in 83 percent of
the detailed service-providing and mining industries and unit labor costs declined in 19 percent of the
industries.
With this release, productivity and cost measures are published for the first time for truck transportation.
This industry includes both the general freight trucking industry and the specialized freight trucking
industry. Trends in truck transportation are strongly affected by business cycles and the overall economic
environment. Output per hour in the truck transportation industry rose at a moderate rate of about 1.0
percent per year on average between 2001 and 2007, but declined 4.5 percent in 2009.

Technical Note
Labor Productivity: The industry labor productivity measures describe the relationship between
industry output and the labor time involved in its production. They show the changes from period to
period in the amount of goods and services produced per hour. Although the labor productivity measures
relate output to hours of all persons in an industry, they do not measure the specific contribution of labor
or any other factor of production. Rather, they reflect the joint effects of many influences, including
changes in technology; capital investment; utilization of capacity, energy, and materials; the use of
purchased services inputs, including contract employment services; the organization of production;
managerial skill; and the characteristics and effort of the workforce.
Output: Industry output is measured as an annual-weighted index of the changes in the various products
(in real terms) provided for sale outside the industry. Real industry output is usually derived by deflating
nominal sales or values of production using BLS price indexes, but for some industries it is measured by
physical quantities of output.
Industry output measures are constructed primarily using data from the economic censuses and annual
surveys of the U.S. Census Bureau, U.S. Department of Commerce, together with information on price
changes primarily from BLS. Output measures for some mining and utilities industries are based on
physical quantity data from the Energy Information Administration, U.S. Department of Energy, while
output measures for some transportation industries are based on physical quantity data from the Bureau
of Transportation Statistics, U.S. Department of Transportation. Other data sources for some industries
include the U.S. Geological Survey, U.S. Department of the Interior; the U.S. Postal Service; the Postal
Rate Commission; and the Federal Deposit Insurance Corporation.
Labor Hours: The primary source of industry employment and hours data is the BLS Current
Employment Statistics (CES) survey. The CES provides monthly data on the number of total and
nonsupervisory worker jobs held by wage and salary workers in nonfarm establishments, as well as data
on the average weekly hours of nonsupervisory workers in those establishments. CES and CPS data are
supplemented or further disaggregated for some industries using data from the BLS Quarterly Census of
Employment and Wages (QCEW), the Census Bureau, or other sources. Data from the Current
Population Survey (CPS) are used together with CES data to estimate the historical average weekly
hours of supervisory workers for each industry. The CPS data are also used to estimate the employment
and hours of self-employed and unpaid family workers in each industry. Other sources of employment
and hours data for some service industries include the Association of American Railroads, the U.S.
Department of Transportation, and the U.S. Postal Service. Hours of all workers in an industry are
treated as homogeneous and are directly aggregated.
Unit Labor Costs: Unit labor costs represent the cost of labor required to produce one unit of output.
The unit labor cost indexes are computed by dividing an index of industry labor compensation by an
index of real industry output. Unit labor costs also describe the relationship between compensation per
hour and real output per hour (labor productivity). Increases in hourly compensation increase unit labor
costs; increases in labor productivity offset compensation increases and lower unit labor costs.
Compensation, defined as payroll plus supplemental payments, is a measure of the cost to the employer
of securing the services of labor. Payroll includes salaries, wages, commissions, dismissal pay, bonuses,
vacation and sick leave pay, and compensation in kind. Supplemental payments include legally required
expenditures and payments for voluntary programs. The legally required portion consists primarily of
Federal old age and survivors’ insurance, unemployment compensation, and workers’ compensation.
Payments for voluntary programs include all programs not specifically required by legislation, such as the
employer portion of private health insurance and pension plans.
Revisions: This news release incorporates data from the 2009 Service Annual Survey (SAS) and the
November 2010 Subject Series Revision of the 2007 Economic Census, both published by the Census
Bureau. The labor productivity and output series for all industries have been revised for 2008 and earlier
years as a result. This news release also incorporates the annual benchmark revision of the BLS Current
Employment Statistics (CES) survey published in February 2011. The industries included in this release
are classified according to the 2007 NAICS. All of the measures for 2009 in this release are preliminary
and subject to revision.
Additional Information: While the rates of change reported by BLS in this news release are rounded to
one decimal place, all industry productivity percent changes are calculated using index numbers rounded
to three decimal places.
Year-to-year movements in industry productivity may be erratic, particularly in smaller industries. The
annual measures based on sample data may differ from measures generated by a census of
establishments in the industry. Annual changes in an industry’s output and use of labor may reflect
cyclical changes in the economy as well as long-term trends. As a result, long-term productivity trends
tend to be more reliable indicators of industry performance than year-to-year changes.
Industry productivity and related indexes and rates of change can be accessed online by visiting the
Labor Productivity and Costs web site at www.bls.gov/lpc. Levels of industry employment, hours, labor
compensation, and value of production, and the implicit price deflator for output for these industries, are
available by calling the Division of Industry Productivity Studies (202-691-5618) or by sending an
e-mail to dipsweb@bls.gov. Information in this report will be made available to sensory-impaired
individuals upon request. Voice phone: 202-691-5618; TDD message referral phone number: 1-800-877-
8339.
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